A mixed economic outlook

Global growth will remain sluggish this year as protectionist tariffs continue to rattle manufacturers, businesses, and financial markets. The U.S. economy is decelerating modestly, and recent economic indicators are sending mixed signals about the outlook. While manufacturing activity tumbled to a more than 10-year low in September, the labor market held steady. We believe that the likelihood of a recession remains relatively low in the near term.

Elsewhere in the world, China's growth is stabilizing. Recent measures by Chinese authorities, including reducing the amount of money commercial banks must hold in reserves, may have supported economic expansion. The partial trade deal between the United States and China will help lower tensions, but it is unlikely to resolve all the key issues behind the conflict. In Europe, the outlook is cloudier as Germany teeters on the brink of recession and Brexit drags on. Britain's economy will be the hardest hit by a "no-deal" Brexit. Against this global backdrop, oil prices declined.